Big developments on the Budget…

Assembly Speaker John Perez and Senate President Pro Tem Darrell Steinberg both released a unified “California Jobs Budget,” which will serve as their basis for negotiations with the Governor and legislative Republicans.

The overall architecture seeks to solve a $17.9 billion deficit with $8.3 billion in cuts, $4.1 billion in federal funds, and other solutions including $4.5 billion in revenues. The revenues include:
* closing an oil severance tax loophole ($600 million in the budget year, $1.2 billion annually),
* delays the implementation of new corporate tax breaks agreed to in last year’s budget showdown ($2.1 billion in the budget year; the delay would be for two years–voters will have their says about repealing the tax breaks outright under Prop 24 this November),
* a “tax swap” that would reduce the sales tax and increase the income tax. The proposal is described as a tax reduction while being a revenue generator mostly based on the deductibility of the state income tax under the federal tax code. It makes the income tax less progressive, while at the same time reducing the sales tax which is regressive itself. (The swap generates $1.8 billion in the budget year, $3.3 billion annually afterwards).

On the specific issues, the Budget Conference Committee met today and went through a range of specific remaining health issues, including:

* To implement the Medi-Cal waiver, the budget proposal adds staff to ensure that quality care is provided, including 26 staff at Department of Health Care Services (DHCS). It also adds 13 new staff at DMHC (DMHC) to review network adequacy, fiscal solvency and other issues related to shifting seniors and people with disabilities into Medi-Cal managed care plans (including 5 additional positions at the HMO Help Center) to be funded out of an adjustment in HMO licensing fees. This compromise got a unanimous vote in support.

* The proposed hospital rate cut of 10% was rejected for both public hospitals and for private hospitals, but a hospital rate freeze was adopted instead, alongside a requirement to convert to DRG payment coding by 2014 (as required by federal reform anyway, and which supports the important reform to no longer pay for “never events”–or egregious avoidable errors.) In addition, these hospitals may benefit from a separate federal negotiation over a provider fee.

* Items that were line-items vetoed last year got some partial restorations:
* Community clinic funding
, which was zeroed out in last year’s budget, had a small restoration. The Assembly, angered by the Governor’s line-item veto of these programs, had wanted to restore the programs by $25 million, but the compromise was to go to $10 million, with $2.5 million each to Indian health, migrant health and two other categories:
Prostate cancer: $1 million (conference compromises) item veto last year
* Cancer programs would get a little additional funding. The Every Woman Counts breast cancer screening and followup program is proposed to get an addition $20.1 million, following up from a line-item veto by the Governor last year. A prostrate cancer treatment program for low-income men would get an additional $1 million to help work through a waiting list.
* Maternal and Child Health programs would get $5 million restored (from the $12 million line-item vetoed). $3 million would go to the Adolescent Family Life program, and $2 million to the Black Infant Health fund.

These decisions, as well as earlier legislative committee decisions to reject the worst of the Governor’s cuts to Medi-Cal and other programs, are not final until a budget agreement is reached, and that is dependent on both federal funds and new revenues.

The work continues.

Health Access California promotes quality, affordable health care for all Californians.
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